SABMiller to Consider Sterling's Strength in Deal Review

LONDON—SABMiller PLC's board will take into consideration sterling's devaluation following the U.K.'s vote to leave the European Union when making its final recommendation over a roughly $108 billion tie-up with Anheuser-Busch InBev NV, its chairman Jan du Plessis said at the company's annual general meeting Thursday.

"I think it's one of many things we need to take into consideration," Mr. du Plessis said in response to a shareholder query over whether the pound's devaluation has altered the attractiveness of the offer.

"When the board makes its decision, we will take into consideration all the facts, circumstances and issues we think needs to go" into a recommendation, Mr. du Plessis said. "I just want to give you the assurance that we will consider that as well."

The board plans to review its recommendation once the deal passes its final regulatory hurdle—China. The board will then consider all factors before making a final recommendation to be included in the shareholder's document that will be circulated ahead of a coming vote.

When the deal was struck in November, AB InBev agreed to pay £ 44 ($58) a share for a majority of SABMiller. For 41.6% of SABMiller's stock, AB InBev created a partial-share alternative, essentially a combination of cash and unlisted stock, that translated into a lower per-share price of £ 41.85.

The alternative was devised for SABMiller's two largest shareholders, Altria Group Inc. and the Santo Domingo family's investment vehicle BevCo, to secure their backing in return for helping them with taxation and potential accounting issues.

However, because AB InBev's stock trades in euros—a currency that has risen 8.4% over the past month against the pound—those shares have become more valuable.

As of July 18, the partial-share alternative was worth about £ 49.63, or 13% more than the cash offer, according to Stifel Nicolaus & Co. The difference between the all-cash and partial-share offers increases the likelihood that certain shareholders might call on AB InBev to sweeten the cash offer.

Mr. du Plessis declined to comment further, citing takeover panel rules. He did however, acknowledge that the board debated over whether the two-track offer discriminated against any of SAB's shareholders.

The board canvassed institutional shareholders who acknowledged the alternative offer to only two of its shareholders wasn't fair. Still, they said the board made the right decision by accepting the dual-track offer if it was deemed necessary to allow the remaining shareholders to benefit from the £ 44 a share cash offer. The offer represents a 50% premium to SAB's share price on Sept. 14, the day before media speculation about the deal emerged.

Mr. du Plessis acknowledged there would be a lot of job losses as a result of the deal but that sometimes tough decisions need to be taken.

Write to Alex MacDonald at [e-mail] and Tripp Mickle at [e-mail]

(END) Dow Jones Newswires

July 21, 2016 11:45 ET (15:45 GMT)

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